AUD/USD is capped very close to parity as yet another major Australian surprised to the upside. Australia gained nearly 38.9K jobs in May, much better than expected.Â
This is not the only positive figure, and it joins the hopes for an easy Spanish bailout.
Domestic Strength
Early expectations were for a loss of around 2K jobs in Australia. The big gain in jobs was a positive surprise, and was accompanied by a rise in the participation rate. On the other hand, the unemployment rate rose to 5.1%, but this was expected.
Earlier in the week, Australia reported GDP growth for Q1. It came out at 1.3%, beating predictions of a more modest growth rate of 0.5%. This also came on top of an upwards revision of Q4’s figures: from 0.4% to 0.6%, making the total even bigger.
The first big event for Australia was the rate decision early in the week: the RBA slashed rates by 0.25% to 3.50%, but this was widely expected.
Spanish Hopes
After a long period of denial, Spain is ready to accept help for its banks. There are at least 4 options for a bailout. On the other side of the continent, Germany is beginning to cave in to demands from France, the US and practically all the world to step up efforts to stabilize the region.
Money has been leaving Spain since the Greek elections on May 6th, and Bankia has significant issues that required capital injection from the government.
There is a feeling in the markets that leaders are beginning to wake up. Is it real? Time will tell. In the meantime, the Aussie is on the rise.
After crossing the the 0.99 line that capped it at the end of May, the pair continued higher and reached 0.9967, 33 pips away from parity. If the line of parity is broken, significant resistance appears at 1.02.
For more lines and analysis, see the AUD/USD forecast.
